Here's Why Astec (ASTE) Is Worth Adding To Your Portfolio

On Sep 28, 2016, we issued an updated research report on Astec Industries, Inc. (NASDAQ:ASTE) . The company is poised to benefit from acquisitions and new product launches. Extension of the long-term highway bill, opportunity from pellet plants and strong infrastructure sales activity will also drive growth.

Acquisitions remain a key part of Astec’s expansion strategy, along with organic growth and targeted sales improvement efforts, both in the U.S. and international markets. The company’s goal is to undertake at least one acquisition during 2016. In line with this, it completed the acquisition of Power Flame for $43 million in August. Power Flame’s strong market share, innovative technology and reliable products will boost Astec’s Energy Group’s performance. The transaction is expected to close early in the third quarter, subject to final due diligence and customary closing conditions.

Astec’s total backlog as of Jun 30, 2016 was $229.5 million, up 58.8% year over year. The improvement was primarily supported by its domestic backlog, which recorded a substantial improvement of 80% to $172 million at the end of the second quarter. This is mainly attributable to the passage of a new Federal highway bill, on-going strong private market activity and the $122.5 million pellet plant order announced during the quarter.

The Congress passed a long-term highway bill extending highway authorization for five years with total funding at $305 billion for the next five years. The main purpose of the bill is to improve infrastructure, reformation of the environmental review and permitting processes, and improving truck and bus safety. In the infrastructure business, the company is witnessing better order activity in the large capital projects that were hampered by the lack of a long-term highway bill in the U.S.

In addition, Astec remains committed to boost parts sales volume in the long term, while it works to accelerate competitive parts sales in the U.S. and worldwide. Also, the company’s continuous focus on lean efforts and gross margins will drive growth.

Astec currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other well-ranked stocks in the same sector include Berry Plastics Group, Inc. (NYSE:BERY) , Brady Corp. (NYSE:BRC) and Caterpillar Inc. (NYSE:CAT) .

Berry Plastics has seen upward estimate revisions over the past 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Brady Corp., also a Zacks Rank #1 stock, has witnessed upward estimate revisions over the past 30 days.

Caterpillar, which carries a Zacks Rank #2, has seen solid estimate revisions over the last 30 days.

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